Will more government intervention solve the volatility and low profit margins dairy farmers recently experienced? As I review the Foundation for the Future and Costa-Sanders proposals on government mandated supply control, that is the question I continue to ask myself.
How will these supply management plans affect the future of the dairy industry in the United States and more specifically how will they affect my dairy farm? With every government program there is unintended consequences and a government managed supply control program will not be exempt.
Will supply control have a negative effect on growing U.S. export markets and open the door to more imports? Will supply controls slow domestic consumption and encourage consumers to switch to imitations products?
Rule number one in problem solving is to identify the cause of the problem. The question is, what caused the collapse of dairy prices in 2009? Answer: the decrease in global demand due to financial crisis, not overproduction by U.S. dairy farmers.
Are we solving the right problem by implementing another government program that may limit dairy farmer’s ability to plan for the future? Many dairy farmers feel we need to focus on simplifying our current federal dairy policy.
Eliminating the dairy price support program, replacing the four class-product price formula price discovery with a two class competitive pay price discovery and improving the timeliness of dairy product reporting would be a great start.
I have reviewed computer models on how this type of government supply control program will affect the U.S. dairy industry. These models target volatility and profitability. I have not been especially impressed by the potential results.
Recently, a study was released that looks at the supply control programs in Canada and the EU and raises some additional concerns about just how effective supply control is and unintended consequences for dairy producers.
In my opinion, there continues to be many unanswered questions about the effects of yet another government run program. As a lifelong dairy farmer, I am concerned about how this type of government program will affect our family’s future at Star Rock Farms.
Let’s fix the things that are broke before we look to supply management and more regulation.
Star Rock Dairy, Inc.